The Chamber of Deputies on January 9 approved an amendment to Law No. 045/2021, which governs the Financial Intelligence Centre (FIC).

This amendment followed an evaluation by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG), which identified deficiencies in areas such as the criminalisation of terrorist financing and money laundering, customer due diligence (CDD), politically exposed persons (PEPs), new technologies, and penalties for non-compliance with anti-money laundering and counter-terrorism financing (AML/CFT) standards.

The Parliamentary Committee on Foreign Affairs, Cooperation, and Security reviewed and addressed the gaps highlighted by ESAAMLG.

According to committee chairperson Hope Gasatura Tumukunde, the amendments demonstrate Rwanda’s commitment to strengthening its financial systems, aligning with international standards, and protecting the nation from financial crimes.

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Among the critical changes, the new law also aims to enhance international cooperation in information exchange, particularly as the FIC works toward joining the Egmont Group of Financial Intelligence Units (FIUs).

Below are eight key amendments to the new law

1. Enhanced definitions and new terms

The new law improved some definitions such as terrorist financing, politically exposed persons, money laundering and inserted new terms such terrorist, terrorist act, terrorist organisation and virtual assets service provider

It also expanded money laundering forms, including self-laundering, involving those who committed the predicate offense; third-party laundering, involving unrelated individuals and standalone laundering, prosecuting cases without evidence of fund origins or a linked crime.

2. Extended freezing periods

The law has enhanced the rules for provisional measures related to offence-linked funds or assets, aligning them with international standards.

As a result, the Financial Intelligence Centre now has the authority to freeze assets for up to 30 days, an extension from the previous limit of 3 days.

3. Expanded reporting obligations

In an effort to prevent and combat money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction, the Centre was the sole authority responsible for conducting financial intelligence.

Additionally, virtual asset service providers, court bailiffs and other professionals were designated as reporting entities tasked with identifying and reporting suspicious transactions and adhering to anti-money laundering and counter-terrorism financing (AML/CFT) requirements.

4. Customer due diligence (CDD)

Reporting entities suspecting money laundering, terrorist financing, or the financing of weapons proliferation are now permitted to bypass the CDD process if it might alert the customer. Instead, they can file a suspicious transaction report with the FIC.

The law also requires reporting entities to retain information obtained during CDD, including account records, business correspondence, and analytical results.

5. Politically exposed persons (PEPs)

When dealing with foreign politically exposed persons (PEPs), a reporting entity must perform customer due diligence, secure senior management approval for new or ongoing business relationships and take reasonable steps to verify the source of their wealth and funds.

The new law extends these requirements to both respondent and correspondent institutions, enforcing stricter scrutiny and aligning with international standards.

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6. Cross-border correspondence

Financial institutions involved in cross-border correspondent banking must now verify the identity of correspondent institutions, assess their reputation and supervisory quality, and confirm their involvement in any investigations related to money laundering, terrorism financing, or weapons proliferation.

Simplified guidelines also apply to reporting entities assisting clients outside legal proceedings, emphasizing the identification of unlicensed money or value transfer operators and enforcing sanctions.

7. Improved governance for legal entities:

Reporting entities are required to confirm the identity and authority of individuals representing legal entities, ensuring transparency and compliance in the entity's control structures.

For legal persons or arrangements, they must identify and verify the customer's identity by examining the governing powers and identifying key senior management personnel within the entity.

8. New punishable acts

Under the new law, it is an offense to engage in money laundering, join an association with the intent to commit related acts, or assist others in obtaining or using funds derived from money laundering.

Additionally, anyone who knowingly or with reasonable suspicion facilitates the financing of terrorism or the proliferation of weapons of mass destruction commits an offense. Non-compliance with legal requirements and obligations is now also classified as a criminal offense.

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The Parliamentary Committee on Foreign Affairs, Cooperation, and Security emphasised the need for robust collaboration among national and international institutions to combat money laundering, terrorism financing, and weapons proliferation.

Tumukunde highlighted Rwanda’s ongoing efforts to share critical information and strengthen partnerships to address financial crimes effectively.

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"Rwanda works closely with security, judicial and administrative bodies regionally and globally to share critical information and enhance efforts to tackle these crimes,” the legislator said.